Last night was the night that Nintendo told investors—and
the world—how they're going to meet the challenges they're facing.

People have been talking about Nintendo a lot lately, mostly
because of worse-than-expected Wii U sales and a lackluster mobile phone presence.
In an investor meeting last night, company president Satoru Iwata outlined the
vision for Nintendo's hardware and services moving forward. Some of his
statements confirms elements of rumors from the past few weeks, while another
part of his remarks offer up some surprises.

Getting 'Mario on the
App Store' has been pitched ad nauseam as a panacea for what ails modern-day
Nintendo. That's not going to happen, Iwata said. But what will happen is that they'll
be making apps for mobile devices, with the aim of pulling users of those
devices into Nintendo's ecosytem. Iwata's words, with emphasis added:

Therefore,
we would like to, instead of directly expanding our business on smart devices,
focus on achieving greater ties with our consumers on smart devices and
expanding our platform business.

We
will use a small, select team of developers to achieve it. Also, we recognize
that attracting consumers' attention among the myriads of mobile applications
is not easy, and as I said before, we feel that simply releasing our games just
as they are on smart devices would not provide the best entertainment for smart
devices, so we are not going to take any approach of this nature. Having said
that, however, in the current environment surrounding smart devices, we feel
that we will not be able to gain the support of many consumers unless we are
able to provide something truly valuable that is unique to Nintendo.
Accordingly, I have not given any restrictions to the development team, even
not ruling out the possibility of making games or using our game characters.However, if you report that we will release Mario on smart devices, it would be
a completely misleading statement. It is our intention to release some application
on smart devices this year that is capable of attracting consumer attention and
communicating the value of our entertainment offerings, so I would encourage
you to see how our approach yields results.

Like the 3DS, the DS was yet
another device that went from a head-scratching enigma to heavyweight champion.
Lots of great games on there, too, but many of them haven't been available on
the newer hardware that followed. That's going to change, with a stream of DS games
promised for the Wii U Virtual Console. Here's Iwata, with our bolding:

We are now sure that we can solve the technical problem of
displaying Virtual Console software from Nintendo DS on the GamePad.

The dual-screen Nintendo DS, one of which is a touch screen, has a very strong
software lineup, and so we plan to add the Virtual Console titles from Nintendo
DS software to the future Virtual Console lineup for Wii U.

Right now, you turn the Wii U on and you wait. Then you
navigate through a bunch of menus that, really, you shouldn't have to. A new
system update due out this summer will make it so you can get to playing games
a lot faster. Straight from Nintendo's top guy, with our emphasis:

Unfortunately, however, after starting up Wii U, there is a wait of over 20 seconds before we can select a video game title, and hence it is not an ideal situation for users now.

To solve this problem, a quick start menu for the GamePad will become a reality after a future system update planned for early summer.This new function is currently under development, and although we cannot show a demo with a real machine, we have made a video to show you what the function can do, so please take a look.

Focus on What Makes the Wii U Different: The GamePad

The Wii U has one thing that no other dedicated gaming
system has: a controller that combines stick-and-button inputs with a
touchscreen. What the system needs, Iwata said, are more games that showcase
the strengths of the hybrid interface. Emphasis ours.

In order to do this, it is obvious that Our top priority
task this year is to offer software titles that are made possible because of
the GamePad. We have managed to offer several of such software titles for
occasions when many people gather in one place to play, but we have not been
able to offer a decisive software title that enriches the user's gameplay
experience when playing alone with the GamePad. This will be one of the top
priorities of Mr. Miyamoto's software development department this year.

Portable gaming, perfecting 3D game design, motion control… Nintendo's
key to success in the past has been finding areas of game-based interaction that
its competitors haven't. Now, they think that health and wellness might be one
of these shark-free 'blue oceans.'

The theme of "health." Of course, defining a new entertainment
business that seeks to improve QOL creates various possibilities for the future
such as "learning" and "lifestyle," but it is our intention to take "health" as
our first step.

Please note, however, that rather than simply setting health as
our theme, Nintendo will also try to expand it in a new blue ocean.

When we use "health" as the
keyword, some may inevitably think about "Wii Fit." However, we are considering
themes that we have not incorporated to games for our existing platforms.
Including the hardware that will enable such an idea, we will aim to establish
a blue ocean.

As those who are already suffering from illness can seek
medical care, our new business domain would be providing preventive measures
which would require us to enable people to monitor their health and offer them
appropriate propositions.

When Nintendo characters show up in games that aren't made by the House of Mario, it's a big deal. Expect that to some evolution on that front, Iwata said. Emphasis ours.

Also, we are planning to utilize Nintendo's abundance of character IP more actively. I think the reason that Nintendo is now considered to have this "abundance of character IP" is perhaps because of our passive approach toward the character IP licensing business, which tends to have a high risk of damaging the value of the character. In other words, we think that spending time to develop our approach of having our characters appear mainly in our carefully selected games has created our current fortunate circumstances. However, we are going to change our policy going forward.

To be more precise, we will actively expand our character licensing business, including proactively finding appropriate partners. In fact, we have been actively selling character merchandise for about a year in the U.S. Also, we will be flexible about forming licensing relationships in areas we did not license in the past, such as digital fields, provided we are not in direct competition and we can form win-win relationships.

By moving forward with such activities globally, we aim to increase consumer exposure to Nintendo characters by making them appear in places other than on video game platforms.

Flexible Pricing Might Be a Way to Expand Nintendo's Reach

Getting somebody to jump on board the Nintendo bandwagon might be easier if the cost of entry was a little lower. Iwata's remarks on that:

Needless to say, there are core users in new markets who buy our hardware and software at the same price as in the existing markets and we really appreciate these consumers. For a large majority of consumers in the new markets, however, the current prices of hardware and software in the existing markets are generally difficult to accept.

To leverage Nintendo's strength as an integrated hardware-software business, we will not rule out the idea of offering our own hardware for new markets, but for dramatic expansion of the consumer base there, we require a product family of hardware and software with an entirely different price structure from that of the developed markets.

Once we can establish such a connection with consumers in these nations, we will be able to use smart devices to share our information as well as important content distribution infrastructure. We plan to take significant steps toward such a new market approach in the year 2015.

Buy More, Pay Less

If your love of Nintendo runs deep, you might be getting a reward better than the coolest Club Nintendo swag: less pain on your wallet.

For example, until now it has been taken for granted that software is offered to users at the same price regardless of how many titles they purchase in a year, be it one, five or even ten titles. Based on our account system, if we can offer flexible price points to consumers who meet certain conditions, we can create a situation where these consumers can enjoy our software at cheaper price points when they purchase more.

If we can achieve such a sales mechanism, we can expect to increase the number of players per title, and the players will play our games with more friends. This can help maintain the high usage ratio of a platform. When one platform maintains a high active use ratio, the software titles which run on it have a higher potential to be noticed by many, which leads to more people playing with more titles. When we see our overall consumers, they generally play two or three titles per year. We aim to establish a new sales mechanism that will be beneficial to both consumers and software creators by encouraging our consumers to play more titles and increasing a platform's active use ratio without largely increasing our consumers' expenditures.

One Username, All of Nintendo

A feature that users have been requesting for a while now—a unified Nintendo Network ID—could be on its way to becoming a reality.

On Wii U, we launched Nintendo Network IDs, which are abbreviated as NNIDs. This is the first step of our efforts to transform customer relationship management from device-based to account-based, namely, consumer-based, through which we aim to establish long-term relationships with individual consumers, unaffected by the lifespans of our systems. Our future platform will connect with our consumers based on accounts, not devices.

Of course, when we do launch new hardware in the future, rather than re-creating an installed base from scratch as we did in the past, we wish to build on our existing connections with our consumers through NNIDs and continue to maintain them. Another very important point that we need to consider is how we will incorporate smart devices into Nintendo platforms, which were composed solely of Nintendo hardware in the past.